Charities brace for economic slowdown

Published 7:00 pm, Friday, January 30, 2009

DAVOS, SWITZERLAND

By COLLEEN BARRY

Associated Press

Six-figure charity donations from Wall Street warriors dried up with corporate year-end bonuses this year. The children's charity World Vision made up for the difference by calling its donor list one by one.

That worked this time around, but as the global economic downturn widens, non-governmental organizations are being forced to make hard decisions and redouble fundraising to ensure the world's neediest people do not become the crisis' forgotten victims.

World leaders including U.N. Secretary-General Ban Ki-moon, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and former President Bill Clinton launched passionate appeals at this week's World Economic Forum not to let the economic crisis become an excuse to turn away from the world's poorest.

"There are people who are not starving," Clinton reminded participants at the elite gathering this week. "Those who can do more, should."

Nonprofit organizations are lowering their 2009 revenue forecasts -- though they still don't have a reliable idea of how hard donations will be hit. Fearing the worse may be to come, many ran fundraising drives in December -- and are seeking advice from the business world on how to inject a bit of business sense -- and not just compassion -- into their operations.

In recent years, the Davos forum has become a hub for charities, business and governments to swap ideas on how to tackle the issues of poverty -- creating what former British Prime Minister Tony Blair this week called and alliance of the "business brain" with "social forces" to produce the best results.

The nonprofit world has always had a strong obsession with overhead to get as many dollars to the field. Simply cutting costs does not necessarily bring the best results, said Gib Bulloch of Accenture, which does management consulting for non-governmental organizations.

"I can't tell them how to do emergency relief better. I can tell them how to get meds at bulk prices, improve efficiency and streamline (information technology)," Bulloch said. "Investing in technology, people and capital building can enable these agencies to have more impact."

World Vision saw the crisis coming when it set its fiscal targets at the end of October, said Chief Executive Dean Hirsh. The charity froze salaries for its 35,000 employees worldwide, put a hold on new hires, reduced travel, canceled meetings and scaled back its 2009 revenue growth target from 8 percent to flat or 3 percent.

Checks from Wall Street's fat cats did not show at the end of the year as usual. Hirsh also worried about losing the 1.5 million Americans who make monthly contributions of $30 to $50 a month to sponsor a child, so World Vision started making calls and offering sabbaticals to donors who felt they could not continue making payments now.

The thinking was it would be easier to keep the donors on the books, than recruit new ones later.

"We want to keep all of our projects at 100 percent, or close to 100 percent. We don't want layoffs because economic times are so hard everywhere," Hirsh said.

But the charity world needs other skills, too, such as expertise in monitoring currency fluctuations.

Oxfam Great Britain CEO Barbara Stocking said the drop in the British pound was cutting deeply into its operational budget. Most of its donations are collected in pounds but then distributed to 64 countries. She forecast that the pound's slide would reduce by 10 million pounds the 200 million pounds spent in developing countries in the fiscal year that ends in May.

Stocking said she was not so worried about Oxfam GB's 500,000 regular private donors, but that the problem now was that "we can't get new people."

Save the Children's Secretary-General Charlotte Petri Gornitzka said the charity -- which has 24 national organizations that often run duplicate operations in developing countries -- is taking measures such as merging three national offices in Uganda.

Save the Children has not yet experienced a slowdown in giving, but is worried about taking a hit in 2010 if governments and corporations cut back on their generosity. The organization receives one-third of its $1 billion annual revenues from governments.

Corporations may find other ways to continue support -- such as a telecoms company providing emergency communications equipment, or management consultants offering governance advice.

Despite the economic climate, Gornitzka said she still hoped to triple revenues by 2015.

"It is a very bold objective. At the same time, it would take $9 billion a year to get every child in the world to go to school. That is half of what U.S. consumers spend on ice cream."